‘Sobering experience’ likely in earnings season
The upcoming earnings season promises to be a “sobering experience” for Australian companies and Australian equity funds.
Companies are due to report their results for the first half of 2020, with many firms have held off making an official forecasts or guidance due to the uncertainty of the market environment.
Rhett Kessler and Anton du Preez, managers of the $853 million Pengana Australian Equities fund, said statements made this reporting season were expected to be broad or deferred to a later date while there would likely be further capital raisings announced.
“It promises to be a sobering experience and for investors, it will be the first opportunity to see the damage the past six months have wrought on their investee companies. Whilst many investors understand that FY20 has been unusual and are focusing their attention on the prospects for FY21 and beyond, it is more difficult than ever for companies to give any forward-looking guidance.
“On balance, we feel that managements will err on the side of caution when making comments on the outlook of their business.”
Top holdings in the $853 million fund included Aristocrat Leisure, CBA, Telstra and Woolworths.
According to FE Analytics, within the Australian Core Strategies universe, the Pengana Australian Equities fund lost 5% over one year to 31 July, 2020, versus losses of 7.2% by the Australian equity sector.
AUTHOR
Laura Dew
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